What A Property Manager Brokerage Does

It occurred to me that though I blog about managing properties, I have never actually defined what a property management company does. My accidental business was defined by the Arizona Secretary of State's office as a "property management" business. And you can see how well that turned out. I was able to get around a few major points--like not having a real estate license in Alabama--because I was only managing my own properties. But for the most part, someone at a property management company better have a real estate license.

I currently work for a property management and real estate brokerage. In fact I was the first "real estate" portion of the real estate brokerage. There are now four of us (and a few part-timers) who sell real estate and rent out homes for our company when the occasion arises. But mostly we sell and sit around processing the absurd stories we hear on a daily basis. There are enough true tales where I work that they don't need this blog.

Anyway, I am in the mood to type this morning and thought I would take a few chunks of cyber space to explain a few things.

Property Managers Work for the Landlords: Actually, we are called "owners" in the biz. That's what the contract says. That's who pays the company. There should never be confusion about this point. Ever.

Property Managers Find Tenants: Tis true. I am certain you are shocked by this. Landlords hire a company to show homes, screen tenants and negotiate leases between tenant and landlord. I equate it to Charlie's Angles. Charlie was never seen but was the guy everyone needed by-off from. Charlie is the owner.

The property manager will say, "let me see if the owner will allow you Mr. 760 credit score who makes $300,000 a year to rent this $1000 a month home. I am not sure..." The tenant then waits. And waits. And calls (repeatedly) asking if the owner approved. Then when they are told "not yet," the tenant proceeds to give lots more personal information about why they are so hot and the owner should pick them. The property management company then takes copious notes of what the tenant says and puts it into the database. For later. Just in case. Of course, what really has happened is the potential tenant has called sixteen times in an hour and the owner just hasn't checked their voice mail yet.

Please don't confuse this: property managers don't approve tenants. That's the landlord's doing.

Property Managers Schedule Maintenance When Something Breaks: I don't fix broken toilets. Neither does my broker or my company's accountant. We call someone to do this. The big misnomer I hear from owners is that they are surprised they have to write the check anyway. After all, they have a property management company! The work isn't done for free. Sometimes (like in the case of Luigi's company--and actually the one I work for as well), the property management company has an on-site maintenance company they are affiliated with to handle repairs.

Property Managers Handle the Legal and the Ugly: Property managers call the eviction attorney (guess who writes the check?). Property managers go to court to explain to Your Honor that the tenant really did trash the home. Here is the proof. Here is the lease. Here is the receipts.

There are some statistics somewhere that suggest that most novice owners hire property management companies when relationships go South. The owner and the tenant have been chummy. The tenant gets a little late on rent and figures there is enough good will floating around to stretch things out a bit. Then something breaks and the owner, who hasn't received rent, doesn't want (or can't afford--because they haven't received the rent) to fix the broken whatever. Then the tenant, who is pissy that the broken whatever hasn't been fixed withholds rent. This vicious circle continues and eventually the owner, fed up and feeling helpless, hires a property management company to straighten out the tenant.

Property Managers Keep Really Good Records: Actually, in Arizona at least, property management companies are more closely scrutinized and more often audited than non-property management brokerages. For one reason is because there are trust accounts. Property management companies handle tenants' security deposits. Think of it this way: if a property management company manages 800 homes and the average security deposit is $1200, that's a lot of money a property manager has in the bank. In addition, any tenant can complain about anything to the Department of Real Estate and be heard. So, property management companies keep tighter controls on their books and need to be meticulous in their record keeping.

Property Managers Handle Frustrated Owners: And we are all frustrated. We feel helpless. A smart owner knows they are not the only fire-drill on the property manager's plate and knows how to be gracious when the need arises. The foolish owner demeans everyone, making sure their calls won't be returned and their e-mails will be a lower priority.

Property Managers Tell Stories Everyone Who Hears Thinks We Made Up: No we didn't. The guy who had the presence of mind to send a selfie of him holding an envelope in front of our office as "proof" he paid the rent, yet it was never received, is hilarious to us. It brings a bit of amusement to balance out the frustrated owner who did not receive their money.